Further, businesses were more confident about this year’s production, causing a slight increase in employment.

However, Bernard Aw, principal economist at IHS Markit, said, “Whilst there was a slight increase in employment, the ongoing presence of spare capacity will likely weigh on hiring in coming months. It may not be a surprise to see jobs growth turning lower as firms tap on existing resources for operation needs.”

Businesses remained cautious on their purchasing activities despite improved demand, with input buying remaining stable, and inventories are being drawn down.

Vendor performance were also lower in January, possibly due to raw materials shortage, such as longer delivery times for industrial metals and plastics, IHS Markit said.

The level of incomplete work decreased this month, extending the current period of falling backlogs to more than three and a half years.

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